Global equities recovered their losses from earlier in the week as shown in the EMI Global Equity Index table below. The EMI Index is now showing a slight gain for the week and a widening of the year to date gain to 0.5%. Brazil continues to fall deeper into negative territory for 2013 and is now showing a loss of 6% for the year to date. On the other hand Japan's bourse is now showing a double digit gain for the year as a weak Yen continues to support this export oriented economy. Germany is only showing a gain of 2%. So maybe there are no official currency wars, but as it stands at the moment interrelationships among various currencies are providing an advantage for some and not for others. The balance is a bit out of sync at the moment.
This week's round of oil inventory reports will be delayed by one day (due to the U.S. holiday) with the API data being released on Wednesday afternoon followed by the EIA report hitting the media airwaves at 11 a.m. on Thursday. My projections for this week’s inventory report are summarized in the following table. I am expecting the U.S. refining sector to decrease marginally. I am expecting a modest build in crude oil inventories, a modest decline in distillate fuel... as the weather was very winter like over the east coast... and a small build in gasoline stocks during the report period even as refinery runs continue to decline ahead of U.S. maintenance season. I am expecting crude oil stocks to increase by about 1.5 million barrels. If the actual numbers are in sync with my projections, the year-over-year comparison for crude oil will now show a surplus of 33 million barrels while the overhang versus the five-year average for the same week will come in around 57.4 million barrels.
I am expecting a build in crude oil stocks in Cushing, Ok and in PADD 2 as the Seaway pipeline has been running at constrained levels for most of the report period. This will be bullish for the Brent/WTI spread in the short term as the spread is currently trading well above the level it was trading at just prior to the Seaway pipeline announcement.
With refinery runs expected to decrease by 0.2%, I am expecting a small build in gasoline stocks. Gasoline stocks are expected to increase by 0.5 million barrels which would result in the gasoline year over year surplus coming in around 2.2 million barrels while the surplus versus the five year average for the same week will come in around 6.7 million barrels.
Distillate fuel is projected to decrease by 1 million barrels. If the actual EIA data is in sync with my distillate fuel projection inventories versus last year will likely now be about 18.6 million barrels below last year while the deficit versus the five year average will come in around 14.3 million barrels.